The Hindu Business Line : Suzlon shares recover, not REpower

Kolkata, Nov. 7 Market price of Suzlon Energy has recovered over 59 per cent in the past week, share price of REpower, the German producer of wind energy systems and its subsidiary, is yet to recover it recent sharp loss.

Concerns regarding Suzlon, which is highly indebted, are the main reason behind the development.

Suzlon has suspended its rights issue to raise capital worth Rs 1,800 crore owing to the turmoil in the financial markets. Suzlon has also suspended the process of negotiation for a “domination and profit transfer” agreement with REpower.

Suzlon currently holds over 65 per cent in REpower and to complete the purchase of Martifer stake of 22.4 per cent in REpower, it is reportedly discussing with the seller for a mutually acceptable payment schedule.

Purchase

In a related development, T. Rowe Price acquired another 58 lakh shares, or 0.39 per cent stake, in Suzlon, taking its stake to 5.02 per cent. T. Rowe Price’s acquisitions were through open market purchase at an average price of Rs 48.22 a share, Suzlon said in a statement. Suzlon shares are trading at Rs 67.00 up 11.32 per cent in the Mumbai market.

According to Kotak Securities, Suzlon’s Q2 numbers were below its expectations. Suzlon presented consolidated numbers without consolidating Hansen and REpower numbers (earlier Hansen was being consolidated).

It said: “Suzlon’s order backlog of Rs 14,050 crore is down 14 per cent over the corresponding quarter of the previous year. As a result, the revenue visibility has also fallen to 15 months of FY-08 wind generator revenues”

Large deals

The company has indicated that it is expecting some large deals to be finalised in the coming months.

There has been some sluggishness in new order finalisation as a result of the credit crunch in the US and the EU, which has also impacted order booking. During the quarter, order inflows from the international markets have fallen 96 per cent to 19 MW. Given the fact that between 65 and 70 per cent of is revenue is derived from international markets, such a sharp slowdown in order inflows is alarming.

Analysts said the REpower also showed weakness on the margin front.

Suzlon closed at Rs 70.70, up over 17.5 per cent. Some over 2.72 crore shares changed hands on Friday on the BSE.